Friday, September 30, 2022

The most important capital of Ukrainian farmers is strength of mind

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The perfect storm. This is the name of the life of Ukrainian farmers now. Because of the war, automobile fuel is becoming more expensive, agricultural machinery is being destroyed.

Inventories, warehouses and crops in the fields are being destroyed. The war has made it more difficult to transport and sell crops. Farmers die during the fighting actions.

Business

From February 24 to June 15, the total amount of losses in Ukraine’s agriculture amounted to $27.6 billion. Of these, indirect losses amounted to $23.3 billion.

 Most of the indirect losses (51%) are the reduction in the cost of agricultural products due to the blockade of ports. These losses amounted to $11.9 billion. Direct losses amount to 4.3 billion dollars. The main types of direct losses are listed in the table.1

Agricultural losses in Ukraine, mid-June

Type of lossLosses in million dollars Share in total losses
Agricultural machinery92622%
Agricultural products61314%
Granaries2726%
Animal husbandry1363%
Inventory items*1363%
Perennial plantations892%
Other212850%
Total4300100%

* Including fuel and fertiliser

Because of the war, 10,000 agricultural enterprises have losses.2 This is one in six agricultural enterprises in the country.3

Compensation for losses in the usual ways is not possible. Insurance companies did not insure agricultural enterprises against losses due to the war. This type of insurance was absent in Ukraine.4 There is no information that this type of insurance began to develop. The state also does not compensate for losses due to voices. In Ukraine, there are national,5 regional6 and even foreign7 programs to help farmers. However, all these programs are designed to develop new industries or import agricultural products. Assistance is preferential loans, subsidies and so on. There is no information about compensation for losses already received due to the war. As a result, Ukrainian farmers are left alone with the existing losses.

Business conditions have also become worse. The cost of diesel fuel has increased by almost 50% since the beginning of the war. The average price rose from 1.1 to 1.6 dollars per litre.16 Also in many regions of Ukraine there is a shortage of diesel fuel and gasoline. There is a shortage of workers in many agricultural enterprises.

Despite the protection of the state, many agricultural workers are drafted into the army.17 Fighting is taking place on almost 20% of the country’s territory. Because of these reasons a third of the fields are not sown. These fields are empty and will not produce a crop.18 Demand has declined. Five million people left Ukraine.21 The solvency of those Ukrainians who remained decreased by 20%.22 The Ukrainian hryvnia has devalued by a quarter against the dollar.19

Personal safety

Material losses are not the only problem for Ukrainian farmers. Threat to life is another problem.   Even the very rich and famous businessmen can die in the war. On the night of July 31, the owner of the largest grain trading company “Nibulon” Alexey Vadatursky died. The businessman’s capital was estimated at 430 million dollars. He ranked 24th among the richest Ukrainian businessmen according to Forbes magazine. The businessman was lost in the house in the city of Nikolaev, the Nikolaev area. The cause of death was rocket fire from the Russian army.8 There are many such cases. On July 23, a 71-year-old local farmer died in the village of Rizhevka, Sumy district, Sumy region. The reason is the shelling of the Russian army. The farmer’s house and two tractors were also destroyed (see photo above).9

Not only Russian soldiers are killing Ukrainian farmers. Sometimes farmers die because of the mistakes of the Ukrainian military. This happens when agricultural work is next to military operations. For example, near the village of Prelestnoe, Kramatorsk district, Donetsk region, on July 31, a truck driver was blown up by a mine.

This mine was supplied by the Ukrainian military. The mine was anti-tank. Such mines in the rear are indicated by red flags. But in this case the driver could not see red flag. The car drove into the field. The driver was supposed to pick up the crop. It is not known why agricultural work was in the minefield.10

There is no data on the number of dead farmers in Ukraine. Probably several hundred killed and wounded. According to the UN, as of June 19, 5,110 civilians were killed in Ukraine. Another 6,752 civilians were injured. From February 24 to July 18, 346 children were killed in Ukraine. 547 children were injured.11

In the current situation, farmers themselves take care of their safety. People buy bulletproof vests, helmets and other protective equipment. There is no state program to protect farmers.

Family and life

The life of farmers is better than most citizens of Ukraine. The average income per hectare of land is $107.12 It is necessary to own only 3 hectares of land to receive an income that is equal to the average salary in Ukraine.13 Farmers with small plots of land are those businessmen who own 20-100 hectares. There are about 32 thousand such farmers in Ukraine.12 As a result, a small farm enterprise allows a businessman to earn an income in the amount of 6.5-30 times more than the average salary in Ukraine. The income of large businessmen is even higher. This is only official data. But real incomes can be even higher. Since 30% of the land in Ukraine is cultivated illegally.14 Therefore, no one knows the exact amount of farmers’ income.

The life of the farm workers is not so good. But it’s tolerable. It is reliably known that the average salary of employees in agriculture increased by 48% in 2021. This figure amounted to 594 dollars. This actually equals the average salary in Ukraine, which was $629.15 That is, farmers live better than most Ukrainians. And farmers’ employees live no worse than most Ukrainians.

As a result, farmers and agricultural workers have no problem buying food, medicine, and other essentials. When the war started, most of these people had a supply of money. This made it possible to solve all problems. Although there is a war going on in Ukraine, the education of children has been continuing remotely since March 28. As usual in late May and early June, school graduates received certificates. Students are admitted to universities. Many universities were evacuated to the western part countries. It’s safer there. This allowed the learning process to continue.

Goods are sold, although more expensive than before. Pharmacies have medicines. In areas where pharmacies do not operate, medicines can be ordered through intermediaries. Actively volunteers work. Things are worse in kindergartens. Many kindergartens are given over to refugees or soldiers. But some kindergartens work. There are many private governesses who can look after children. There are traditions in Ukraine. Grandparents look after small children. It also helps to solve the issue of raising young children.

That is, farmers and agricultural workers withstood the first blow of the war. However, now the war for survival has begun. Now the economic situation of farmers and agricultural workers is getting worse. How bad is not known. The agricultural season has not ended yet. In the fall, it will become known whether the farmers will remain richer than the rest of the Ukrainians.

Produce for sale in Ukraine. Photos: Pavel Kuliuk

Forecast

Agriculture in Ukraine is highly dependent on the results of the war. The results of this year will be worse than the previous one. Agricultural output will decline more than demand. As a result, the share of imported products will increase. In one of the largest retail chains in Ukraine “ATB”, the share of imported fruits and vegetables reaches 50%.20 That is, Ukrainian farmers will lose their own market. It will stay that way until the war is over. Farmers and war play survival game. In the current situation, the main capital of Ukrainian farmers is the fortitude. It’s the only thing that’s good, Ukrainians!

References

1. https://inshe.tv/economics/2022-07-13/692912/
2. https://www.unn.com.ua/ru/news/1987319-plan-vidnovlennya-spryamovaniy-na-pidtrimku-silskogo-gospodarstva-z-visokoyu-dodanoyu-vartistyu-getmantsev
3. https://www.unn.com.ua/ru/news/1987319-plan-vidnovlennya-spryamovaniy-na-pidtrimku-silskogo-gospodarstva-z-visokoyu-dodanoyu-vartistyu-getmantsev
4. https://agroportal.ua/ru/blogs/yak-zabezpechiti-posivnu-pid-chas-viyni
5. https://www.golovbukh.ua/article/ru/9233-gosudarstvennaya-podderjka-agrariev-v-2022-godu-komu-povezet
6. https://agroportal.ua/news/finansy/lvivshchina-rozshirila-programu-pidtrimki-agrarijiv
7. https://delo.ua/ru/agro/ssa-pomogut-ukrainskim-agrariyam-na-100-mln-401640/
8. https://www.forbes.ru/milliardery/473147-v-nikolaeve-pogib-biznesmen-iz-ukrainskogo-spiska-forbes
9. https://t.me/pgo_gov_ua/4912
10. https://t.me/ilovekramatorsk/3082
11. https://www.rfi.fr/ru/
12. https://uteka.ua/publication/news-14-delovye-novosti-36-chto-sovetuyut-vyrashhivat-fermeram-v-ukraine-chtoby-stat-uspeshnymi
13. https://index.minfin.com.ua/labour/salary/average/2017/
14. https://biz.nv.ua/economics/novyy-nalog-dlya-melkih-fermerov-komu-i-skolko-pridetsya-platit-novosti-ukrainy-50098372.html
15. http://milkua.info/ru/post/nazvana-srednaa-zarabotnaa-plata-v-selskom-hozajstve
16.  https://thepage.ua/news/ceny-na-benzin-i-gp-na-seredinu-fevralya-2022-goda  (february); https://tsn.ua/ru/auto/news/ukrayina/cena-na-dizelnoe-toplivo-v-ukraine-mozhet-vyrasti-do-70-grn-litr-ekspert-2118454.html (july)
17. https://agroportal.ua/news/eksklyuzivy/osinnya-posivna-pid-zagrozoyu-cherez-mobilizaciyu-pracivnikiv-agropidpriyemstv
18. https://zn.ua/ECONOMICS/ne-zasejannymi-v-etom-hodu-ostanutsja-tret-ukrainskikh-polej-oon.html
19. https://tsn.ua/ru/auto/news/ukrayina/cena-na-dizelnoe-toplivo-v-ukraine-mozhet-vyrasti-do-70-grn-litr-ekspert-2118454.html
20. https://goloskarpat.info/rus/business/628ba21022eb5/
21. https://tsn.ua/ru/ato/volna-migracii-iz-ukrainy-snova-rastet-kak-i-nezhelanie-vozvraschatsya-v-stranu-vo-vremya-voyny-2101654.html
22. https://biz.today.ua/ru/set-supermarketov-sylpo-zayavyla-ob-yzmenenyy-tsen-na-tovary-chto-zhdet-pokupatelej/

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